Hello, and welcome back. This is Week 1 Lecture 2 of our course on corruption. Today what we're going to talk about is, what is corruption? Can we find some kind of definition of corruption? When we think about the word corruption in everyday parlance, in the way people use it basically for time immemorial. It depicts a kind of transformation of something from good, or functional, workable, working to bad, or not functioning, or not workable, or not good. From delicious apple to an apple that doesn't look quite so delicious. Now that's an old way of using the word corruption but we still use it that way. Today we don't really talk about apples being corrupted, but we do talk about files being corrupted, or hardware being corrupted, or programs being corrupted. We still think of corruption in that particular way. The problem with this kind of definition for people who are trying to study corruption or trying to craft solutions to corruption, or dealing with corruption as a policy matter is that this definition is just too general. It's too large, it's too big. Too many things fit within this definition. And there may be hundreds, thousands of causes for things around the world becoming bad, people becoming bad, systems becoming nonfunctional. So a definition like that really doesn't help us understand a particular phenomenon and it doesn't help us craft solutions to that phenomenon. Social scientists and policymakers have developed a general definition of corruption. When I say general definition, I want to make sure that we understand it's different from a legal definition. A legal definition has to be very precise, because it needs to inform an individual about behaviors that they can and cannot engage in. As well as let a person understand what they need to defend themselves against or let a government know what they, exactly what they need to prosecute. A general definition is just a shared understanding that's precise enough to allow for meaningful conversation. And also precise enough to allow policymakers to understand what it is they're trying to get at. And the definition that's been kind of created and a consensus is built around over the last six years something is like this. Abuse or misuse of power or trust for personal benefit, rather than the reasons for which that power or trust was given. Okay, abuse or misuse of power or trust for personal benefit, rather than the reasons for which that power or trust was given. Now even though this is a general definition and is meant to be immediately useful, there's some parts of it I want to push down on a little bit. I want to look at more closely. And the first of these is power or trust. Power or trust can mean many kinds of things. It doesn't necessarily mean that a person is an employee. It doesn't even necessarily mean that a person is paid. Some of the most important people in policymaking are unpaid advisors, or unpaid monarchs, or people who are just very influential. Power may reside in a clerk who has virtually no power other than the power to stamp a document, or to issue a license. Power and trust may reside in a contracting agent who isn't necessarily an employee of a firm, but who represents that firm, and who's entrusted with contracting in the most advantageous way for a firm. So we think of power or trust broadly and not necessarily an employee or a master. Abuse or misuse is an interesting term because it has a very general meaning, but it's also locally defined. What constitutes abuse or misuse in one place might not constitute abuse or misuse in another place. For example, if, and this is a very large if, a country said in its laws it is okay for a minister to take a bribe. Then in that particular country, and no country like this exists in the world, it's very much a hypothetical. But in that particular country, taking a bribe would not be abuse, or misuse of power. At a more realistic level, if a non profit organization, that say, trucked food to disaster areas, said to its volunteers, you have power and we've entrusted you with these trucks. But you can use them for your own personal benefit when we don't need them for disaster relief, then use of those trucks wouldn't be abuse or misuse. But another organization that said you may not use these trucks for personal use, then use of those trucks would be abuse or misuse. What I want you to understand is that abuse or misuse, even though these are general terms, are really locally defined. Finally, personal benefit rather than the reasons for which that power or trust was given. Older definitions of corruption sometimes were so precisely written that using one's power or trust to get paid in a normal way would have been considered corruption, and that clearly is not the case. What we're talking about is personal benefit rather than the reasons for which power or trust was given. And so let's go back to that contracting agent. The contracting agent takes a kickback, all right. If the contracting agent gets a personal payment from a supplier, right, in exchange for the contracting agent, contracting with that supplier. That's a personal benefit that should have gone to the firm in the form of some kind of discount on that particular good or service. But that contracting agent is taking it for herself instead of passing it on to the firm that she represents. And that constitutes a personal benefit instead of the reason for which power or trust was given. So what we've got if we put all of these parts together is abuse or misuse of power or trust for personal benefit, rather than the reasons for which power or trust was given. Most people, when they hear or learn of this definition think right away of bribery. But bribery is only one iteration of this definition. A bribery of course consists of quid pro quo, the explicit exchange of some kind of personal benefit in exchange for the abuse or misuse of power, all right. And we see bribery all over the world. People like Michael Johnston, Susan Rose-Ackerman have pointed out we often confuse bribery with the larger definition of corruption. But there are more kinds of corruption, there's more iterations of corruption. For example, extortion. Extortion occurs when someone who has the power says I'm going to use this power to harm you, or I'm going to use this power to deny you something to which you are entitled unless you give me a personal benefit. Theft, theft's very common. That occurs when someone whose been entrusted with something, or someone who has power over something takes it against the rules. Embezzlement is very similar to theft, but embezzlement occurs when someone is acting within the rules and still abuses their power or their trust to take something that they shouldn't have taken. And then of course there's nepotism. Nepotism is the most difficult of any of these iterations to deal with. It's a little bit different than the rest. And nepotism consists of favoritism based on affinity, rather than on merit. The most common form of nepotism, of course, is favoring one's offspring or favoring one's relatives. But nepotism also occurs in other affined groups. Favoring people that one went to school with, favoring people who are within the same political clan or tribe. Nepotism is a little bit different because sometimes the damage that's caused by nepotism, and there is damage caused by nepotism, is outweighed by the ease with which transactions can occur because people are familiar with one another. Nonetheless it is damaging and it is included in the iterations of corruption. There's one other kind of corruption that's so important that we need to talk about it for just a moment. Even though it falls outside of this definition and that kind of corruption is undue influence. Now undue influence doesn't necessarily involve an abuse of power directly for some kind of personal benefit. But undue influence still is considered by most people in the world to be corrupt. An undue influence occurs when a person, through some kind of relationship, whether that relationship has to do with affinity or whether that relationship has to do with some kind of transfer of benefits, can move policy, can move decisions, can move the way that things happen in ways that other people can't. Undo influence is making a large campaign donation and then being able to talk to a congress person when other people can't. Undo influence is when a person, because of the position they were born in, can nudge the way that a country is developing, or a country unfolds. Undue influence is access that a person doesn't really earn through merit, that they don't really earn because they should have that influence. And yet it's an influence they exercise when other people can't. And undue influence is one of the things that people are out there in the squares protesting against around the world. All right, the takeaway for today, what we should remember in terms of understanding corruption is that social scientists and policymakers have developed a general definition of corruption. And that definition is the abuse of misuse of power or trust for personal benefit, rather than the reasons for which that power or trust was given. Thank you and I look forward to seeing you again for the next lecture.